With a sharp decline in US retail sales and profits warnings from heavyweights such as Lucent and Ciena sending the US market lower, Irish share prices fell back in modest trading.

The exception to the downward trend was Smurfit, which hit an intra-day high of €2.57 and closed eight cents higher on €2.55. Smurfit shares have improved 16 per cent in the past month and have so far resisted the weakness of the past week. That said, it's difficult to see a stock so dependent on the US economy making much progress from the current level.

Both AIB and Bank of Ireland were given positive first-time coverage from Morgan Stanley, which put an "outperform" tag on both stocks. Morgan Stanley analysts, commenting on the banks' 20 per cent discount to the European sector, put a €14.50 price target on AIB and €11.50 on Bank of Ireland. That bullish note, however, did not prevent both stocks succumbing to yesterday's general market weakness and AIB was down 11 cents on €12.03 while Bank of Ireland was 13 cents lower on €9.77.

Industrial stocks were generally weaker and CRH lost 36 cents to €19.28 although Elan was in positive territory in the opening session on the New York Stock Exchange. By midday, Elan was trading 47 US cents higher on $41.47. Grafton lost 15 cents to €3.35.

Independent News & Media - after cuts in earnings forecasts following Wednesday's trading statement - fell as low as €1.86 before eventually closing seven lower on €1.90.

Irish shares overseas were mixed with Iona down more than a dollar on Nasdaq in early trading and e-learning group Riverdeep up almost 5 per cent. In London, AIM minnow Alltracel was 3p lower on 301/2p sterling.